Omnichannel is no new concept in retail, especially after the COVID-19 outbreak. Brands can no longer rely solely on the brick-and-mortar in-store experience as consumers flock to the internet to shop. Today’s shoppers expect a unified, customized experience, with 76 percent of consumers more likely to buy from brands that personalize customer interactions across touchpoints. This means building a true omnichannel shopping experience is no longer a nice-to-have – it has turned into a strategic priority.
Offline and online co-exist
When e-commerce came to life and forever changed the retail landscape, there were questions over whether online shopping would mean the end of brick-and-mortar stores. However, the past few years have shown that it is not a question of online or offline; instead, both worlds co-exist and complement each other.
Online shopping has boomed in recent years, accelerated by the pandemic. According to UNCTAD, the average share of global internet users that purchase went online from 53 percent in 2019 to 60 percent in 2021. Some countries even experienced a sharper increase, such as the United Arab Emirates, doubling from 27 percent to 63 percent.
Despite this trend, brick-and-mortar stores remain a strategic distribution channel for retailers. Indeed, nearly half of American consumers prefer in-store over online shopping, attributed to factors such as the ability to see and feel products before they buy. What is more, the retail sector is now experiencing a reversal of what happened during the pandemic. In-store sales are growing at a higher rate than online channels. But consumers no longer want offline-only or online-only shopping; they expect a smooth, seamless and highly integrated experience of both.
Given the shift in consumer behavior, retailers that invest in a solid omnichannel strategy enjoy a competitive advantage over pure online/offline players. On one hand, they can achieve higher revenue as omnichannel consumers shop more frequently. According to McKinsey & Company, in the apparel category, omnichannel customers shopped 70 percent more often and spent 34 percent more than pure offline shoppers.
On the other hand, retailers with a brick-and-mortar presence typically attract more customers organically than online-only players. This translates to lower investment in paid marketing and a better bottom line.
Global retail giants are already participating in the omnichannel game. Previously online-only brand Amazon has joined the brick-and-mortal playing field with Amazon Go and Amazon Fresh. Equipped with technology such as Artificial Intelligence (AI), multi-sensors and state-of-the-art CCTV cameras, these stores allow customers to shop without the hassle of checking out. In return, the company can keep track of consumers’ habits, send corresponding offers and discounts, and offer a customized shopping experience.
Augmented Reality shopping
Consumers should be the focus of any omnichannel approach, and Augmented and Virtual Reality (AR/VR) is the vehicle for brands to become more consumer centric. According to Eclipse, 71 percent of consumers say they would shop more often if they could use AR.
AR/VR bridges the gap between in-store and online shopping. With the help of AI and machine learning, brands can now engage with consumers in a way never seen before. The pandemic has fostered a new demand in retail – the ability to see and feel a product on a digital platform. With stores closed down, the live, in-store experience had to become virtual, and AR/ VR is the perfect solution to fulfill this new demand.
Global brands are beginning to leverage the technology. Ikea is already incorporating AR/VR into its strategy. With its mobile app, the company allows customers to scan their rooms and digitally place furniture in their homes with real-time customization, browsing through 2,000 catalog items from the comfort of their own homes.
Metaverse for retail?
Metaverse – a current buzzword – refers to an “integrated network of 3D virtual worlds” accessible through a VR headset. It is a fast-emerging space where people can shop, be entertained, and it blurs the lines between physical and digital life. Given its potential, the metaverse is expected to empower the next evolution in omnichannel retail, with AR/ VR being the key vehicle for that journey.
Big brands such as Ralph Lauren and Gucci are already on their path of exploring a new business model called “Direct-to-Avatar” (D2A), where they will be selling products directly to avatars – the consumer’s digital personas on the metaverse. Their products are no longer made of atoms, but of bits and pixels.
Even the runway has made its debut on the metaverse. The first ever Metaverse Fashion week was held in March, featuring luxury brands and household names. It is now possible for consumers to sit next to the runway, try and buy any outfit they like in a matter of seconds – all in the virtual world. Companies will not only be selling products on the metaverse but also offer new worlds of virtual experiences to their customers.
With the incredible success that AR/VR games like Minecraft, Fortnite and Roblox have had, the next generation of consumers will be familiar and comfortable with virtual worlds. It is only a matter of time until they will want to see their favorite brands on the metaverse. Major tech players have already invested billions of dollars into making the metaverse an indispensable part of e-commerce. Hence, a good starting point for companies looking to engage with consumers on the metaverse is to build up their resource pool involving AR/VR,5G internet, blockchain, crypto and non-fungible tokens (NFT).
It is only a matter of time until the metaverse becomes the new playground for retailers. Those brands that have planned ahead will take the lead.
This was posted in Bdaily’s Members’ News section by
Bach Nguyen Luu, FPT Software